The instrument industry performed well in 2014, a welcome rebound from a lackluster 2013. Although a fair degree of uncertainty reigned, a number of positive developments helped make the year a success. The most important development was the improvement of the US economy, which steadily accelerated. China also turned in good economic progress that was only a tad lower than in 2013, although new government policies in the food, drug and environmental areas caused Chinese-related instrument revenues to be less than anticipated. Global GDP also showed some improvement, and exchange rates were less impactful. Thus, the analytical-instrument market, including aftermarket and service, recorded growth of about 4.9%, down slightly from the 5.4% growth IBO had estimated (see IBO 7/31/14).

With a reasonably successful year behind us, one hopes that 2015 could be a repeat, but that is unlikely. Business uncertainty has returned with a vengeance. Economic trends, including global-growth slippage, exchange-rate turmoil and dramatic oil-price declines, have dampened growth prospects.

Global economic-growth outlooks for 2015 have been lowered by economic institutions several times. The World Bank recently cut its 2015 global outlook from 3.4% to 3.0% (see page 15). The Bank predicted that the US and India will perform better than expected but downgraded the outlook for most other countries, including China, Japan, Brazil, the eurozone and especially Russia.

Exchange rates are likely to be more detrimental to instrument and lab-product sales than is slowing economic growth. The very low yen and euro relative to the dollar will translate into lower revenue levels from Japan and Europe when translated into dollars. It is also expected that US-based instrument manufacturing will be at a disadvantage to foreign competition, which may lower revenues for US domestic suppliers. The net effect could be a reduction in industry growth of about one percentage point.

Lower oil prices will hurt the oil and gas industry, the metals industry and other supply sectors. Overall, the impact of lower oil prices on the instrument industry may be minor, but technology markets such as GC and various spectroscopy segments will be affected.

Taking these developments into account, IBO forecasts industry growth for 2015 to be just 3.7%, which is about midway between the performances in 2013 and 2014.

The CRO, biotechnology and food-testing sectors will be the leading end-markets for growth (see page 10). Mass spectrometry (see page 6) and surface science (see page 10) will be the fastest-growing techniques.